U.S. MAKING CLIMATE DEALS AROUND THE WORLD

India says developing world not split in climate talks
Krittivas Mukherjee and David Fogarty (w/Sugita Katyal), 11 August 2009 (Reuters)
and
U.S. and China sign memorandum on climate change
Sue Pleming (w/Richard Cowan and Mohammad Zargham), 28 July 2009 (Reuters)
and
India sees climate change ‘pressure,’ U.S. upbeat
Arshad Mohammed (w/Bryson Hull and Mark Trevelyan), 19 July 2009 (Reuters)

SUMMARY
Top U.S. climate change negotiator Todd Stern sat in as U.S. Secretary of State made deals separately with China and India in July. This month, Stern paid a negotiating call on Brazil, the third of the world’s major emerging economies.

Neither deal involved a binding commitment to cut greenhouse gas emissions (GhGs) but both opened crucial negotiating dialogues that could prepare the ground for something substantive coming out of the international summit on global climate change at Copenhagen in December.

World leaders and climate change activists hope an agreement can be finalized at Copenhagen to succeed the Kyoto Protocol, expiring in 2012, on which most of the nations of the world have based their efforts to cut GhGs in the fight against climate change.

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China is the world’s biggest emitter of GhGs. The U.S. is second. Russia, India and Japan complete the top five. Japan is indicative of the developed economies that are in the process of controlling their emissions. Until President Obama was elected, the U.S. was not. The U.S. is torn between passionate factions serious about cuts and powerbrokers reluctant to take action while economic competitors in the emerging economies do not. But U.S. emissions nevertheless grew only 17% between 1990 and 2008 while China’s grew 178% and India’s grew 125%.

Since President Obama was elected, he has articulated an entirely new commitment to the fight against global climate change. There is now unanimity of opinion among the major developed economies in the world that limits must be put on the GhG spew.

Emerging economies like China, India and Brazil, on the other hand, insist they will not put limits on their economic growth by committing themselves to emissions cuts.

A U.S.-China summit on the issue in Washington produced a memorandum of understanding (MOU) promising more cooperation on climate change, energy and the environment. It did not establish concrete goals or set binding commitments. Secretary of State Hillary Clinton said it was an indication that global climate change is an important aspect of U.S.-Chinese relations.

The MOU reaffirmed both sides’ commitment to a 10-year cooperation deal signed last year by the Bush administration and listed 10 areas of cooperation on research and development, including New Energy, Energy Efficiency, “clean” coal, Smart Grid technologies and battery electric vehicles (BEVs). It also committed both nations to regular future dialogues.

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The U.S.-India meeting in New Delhi between Secretary of State Clinton, Indian Prime Minister Manmohan Singh and External Affairs Minister S.M. Krishna also reached a pledge for an ongoing strategic dialogue with climate change as a central feature.

Like the Chinese agreement, the U.S.-India talks resulted in no concrete goals or binding commitments.

By the time of Stern’s visit with Brazil, analysts were beginning to wonder if there was a method in the flurry of U.S. negotiating activity. Was Stern looking for a way to divide the emerging economies? Could separate bilateral deals somehow drive a wedge between the governments of the emerging economies? China, India and Brazil insist it is their right to an Industrial Revolution and rapid 21st century economic growth based on the consumption of cheap fossil fuels, just as the developed world developed on cheap fossil fuels during its Industrial Revolution in the 19th and 20th centuries. The emerging economies insist that cutting emissions is the responsibility of the developed world and assert that the developed economies should subsidize their transition to New Energy and Energy Efficiency.

India says Stern’s coalition-splitting strategy, if it is one, won’t work. Environment Minister Jairam Ramesh will visit China, Brazil and South Africa before the Copenhagen summit to coordinate a unified stance. India's climate change special envoy Shyam Saran says India will not be isolated in its insistence that the U.S. and the other advanced Western economies finance the transition of the emerging nations to the New Energy economy.

Secretary Clinton in India (click to enlarge)

Both China and India have in the last year aggressively increased their commitments to New Energy but a natural split could be revealing itself. While China’s command economy is investing heavily in the development of a domestic New Energy capacity and rapidly expanding its New Energy manufacturing capability (see THE CHINESE CONQUEST OF NEW ENERGY CONTINUES), India’s chaotic democracy is floundering. Its commitment to New Energy, so far, amounts to goals and it recently proposed that the West take a more active role in funding its buildup. (See INDIA WANTS PAID-FOR SUN).

Climate envoy Todd Stern in China (click to enlarge)

COMMENTARY
While the governments of Western Europe have largely understood and embraced the sea change that is the Obama administration and the international reengagement it has brought, the new U.S. climate change diplomacy is regarded with trepidation by the governments of the emerging economies.

Conservative dominance of Congress in the late 1990s made it impossible for President Clinton to win U.S. ratification of the Kyoto treaty despite the fact that Al Gore, his Vice President, had helped formulate the Protocol in 1997 at Kyoto, Japan. President Clinton now calls it his only piece of legislation that was defeated before he could propose it.

President Obama and the current Democratic Congress have firmly expressed the intention of backing an international agreement at Copenhagen to replace the Kyoto Protocol. The only deal-breaker is the refusal of the emerging economies to participate. Largely as a result of the Bush administration’s approach to the matter, the issue has become polarized. While the suspicious might see in Stern’s aggressive diplomacy the pursuit of a wedge between the emerging economy recalcitrants, it could be Stern is looking for common ground on which to build in Copenhagen.

Brazil's emissions (From Allianz/WWF - click to enlarge)

Where there is perhaps even less common ground is the subject of tariffs and carbon leakage. It might at first seem to be a question of economy versus ecology. But unbalancing ecology makes an environment in which business cannot be done while unbalancing the economy has the same effect. So in the end, it is not economy versus ecology as much as it is balancing economy and ecology.

Domestic businesses in the U.S. and the developed economies must be provided pathways in which to thrive to prevent them from “leaking" their carbon-emissions-generating and economy-enlarging activity to places like the emerging economies that do not cap and charge for emissions. Tariffs must not be put on imported goods that were made at lower costs in emerging economies without emissions caps because that violates international trade laws and would likely set off trade wars.

Yet domestic businesses must be protected from imported goods that were made at lower costs in emerging economies without emissions caps. And all countries, even China, India and Brazil, know they must eventually be brought into an international GhG-constrained regime because emissions know no borders and as long as spew goes on, everybody’s earth remains at risk.

From IEA - click to enlarge

Common ground is what Secretary of State Clinton emphasized as both the MOU with China and the informal agreement with India were officially signed and announced.

Conservatives in Congress adamantly refuse to engage in an international treaty that could put U.S. business and industry at a trading disadvantage with emissions-spewing nations like China and say they will demand a tariff on goods imported from such countries if an agreement is reached.

Conservatives in China and other emerging economies demand that the U.S. pay for the emerging economies through technologies transfers rather than tax imported goods.

In her public statements follwing her meeting with the Chinese, Secretary Clinton noted that China is doing much to increase its New Energy and Energy Efficiency, gracefully agreed when Chinese state counselor Dai Bingguo said that both nations must confront the severe challenges of global climate change and welcomed Dai’s commitment of future cooperation.

There is a pattern emerging of real ties between the 2 nations. In July, Energy Secretary Steven Chu and Commerce Secretary Gary Locke were in China to announce a major extension of previous joint public-private efforts by the Energy Department’s National Labs and Chinese government and businesses on Energy Efficiency and BEVs. (See CHINA, U.S. PARTNER…) More recently Duke Energy and the China Huaneng Group signed an MOU to cooperate on “clean” coal pilot projects. (See CHINA, U.S. UTILITIES INK NEW ENERGY DEAL)

China wants to grow into the modern world

The deal Clinton made with India was much more tenuous. She remained upbeat and focused on solutions despite Indian officials’ complaints that U.S. pressures on them to cut emissions have been heavy-handed.

Unlike China, which is aggressively building New Energy, India is still just getting started in its transition. Much of its New Energy is in the planning stages, symbolic even, much like the building where the symbolic U.S.-India agreement was announced and signed.

From IEA - click to enlarge

Built by India's ITC tobacco and hotels conglomerate, the “green” red brick building outside New Delhi is a showplace for the potential of Energy Efficiency technologies. It maximizes natural light and its windows are made with glass that lets in light but not heat, reducing electricity required for lighting and air-conditioning.

The Indian politicians were using the building and the deal with the U.S. to play to their public. In turn, Secretary Clinton was smartly playing not only to the public, but to the politicians and the international community as well, signaling her country was back and ready to work with the world. She was emphatic that the emissions-cutting measures the West wants from India need not impede India’s economic growth

Secretary Clinton also held private meetings with Prime Minister Singh and his deputies. They negotiated defense deals, including the U.S. sale of nuclear technology to India. U.S. law and security concerns dictate it be firm about and satisfied with proliferation safeguards before such deals can be completed.

While Clinton was doing the public symbolism, top U.S. climate negotiator Stern was meeting in private with “senior Indian officials.” There was, no doubt, more frankness there, as well as hints about linkage between nuclear deals and emissions cuts.

From IEA - click to enlarge

QUOTES
- Shyam Saran, special climate envoy, India: "Climate change being a cross-cutting and truly global challenge, it is difficult to see how bilateral agreements could fill the gap," India's special envoy for climate change…This is unlike trade or security related issues. We need an agreement based on a spirit of collaboration and not on a false sense of competitive compulsion…"
- Saran, on India and other emerging economies’ willingness to cooperate on emissions cuts: "We are prepared to do even more if an equitable and supportive global climate regime is put in place at Copenhagen…The Group of 77 plus China has a good record of coming out with well-reasoned and coordinated positions even though on some specific issues our perspectives may be somewhat different."
- Sunita Narain, head, India Centre for Science and Environment: "America has got a lot of money, muscle power and there is a possibility that India maybe is left out as the lone voice (in Copenhagen)… I completely condemn the U.S. effort to create a wedge in the developing world. It doesn't ever want a strong multi-lateral agreement…"

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- U.S. Secretary of State Hillary Clinton, announcing the MOU with China: "It also provides our countries with direction as we work together to support international climate negotiations and accelerate the transition to a low carbon economy…"
Ian Kelly, spokesman, U.S. State Department: "It is not an agreement per se for each side to commit themselves to some particular target. It sets a structure for dialogue…"
- Chinese state counselor Dai Bingguo: "We all need to take a strategic and long-term view of China-U.S. dialogue and cooperation in these areas…Our two countries have an important contribution to make to the global efforts to tackle climate change, to ensure energy security and to protect the environment."
- U.S. Secretary of Energy Steven Chu, on the China MOU: "Today's agreement ... sets the stage for what I hope will be many years of cooperation…"

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- Secretary Clinton, on her meeting with India Environment Minister Jairam Ramesh: "We had a very fruitful discussion today…We have many more areas of agreement than perhaps had been appreciated."
- India Environment Minister Jairam Ramesh: "There is simply no case for the pressure that we, who have among the lowest emissions per capita, face to actually reduce emissions…And as if this pressure was not enough, we also face the threat of carbon tariffs on our exports to countries such as yours…"